Managing the Psychological Contract: Employee Relations in South Asia

245 Pages·2017·3.95 MB·English

by  ABM Abdullah (auth.)

Managing the Psychological
Contract
ABMAbdullah
Managing the
Psychological
Contract
Employee Relations in South Asia
ABMAbdullah
UniversityofSouthAustralia
Adelaide,SouthAustralia,Australia
ISBN978-3-319-53537-1 ISBN978-3-319-53538-8(eBook)
DOI10.1007/978-3-319-53538-8
LibraryofCongressControlNumber:2017937339
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To my beloved parents,with profoundthanks and lovefor their
countless sacrificesand unwaveringsupportthroughout mylife.
P
REFACE
Globalization has opened the door of opportunity to an increasing num-
ber of corporations, enabling them to cross national boundaries and
venture into new markets geographically. But no matter how easy is the
entry into a new market, making the new venture successful is extremely
difficult. One of the major challenges faced by the corporate managers is
that of managing their Human Resources effectively in different socio-
economic and cultural contexts. The latter play a significant role in the
employment relationship, for many aspects of employment contracts that
affect the cultural orientations of the employees are not written. An
unwritten or informal contract is based on an employee’s perceptions
and interpretations of the communication and promises from their
employers, which is defined as psychological contract by organizational
researchers.
Ininfluencingtheinterpretationofimplicitandexplicitpromisesmade
by employers to their employees, culture plays an important role in the
development process of the employee psychological contract. While the
direct and indirect outcomes of psychological contract breach have been
extensivelystudied,fewstudieshavebeenmadeontheimpactofpsycho-
logicalcontractfulfillmentonemployeeoutcomes.Theresearchpresented
in this book has investigated the impact of psychological contract fulfill-
ment, or, more specifically, the mediating role of psychological contract
fulfillment between the relationship of salient HR practices and employ-
ees’cognitiveandbehavioraloutcomes.Inaddition,thisresearchhasbeen
conducted in the non-Western context of South Asia, an emerging eco-
nomicregion;andthisisinlinewithorganizationalresearchers’increasing
vii
viii PREFACE
interest in the non-Western context for providing a more comprehensive
understanding of the implications of psychological contract breach or
fulfillment.
Forthisstudy,social exchangetheorywasusedasatheoretical back-
groundtounderstandthemediatingroleoffulfillmentofpsychological
contractonemployeeoutcomes.Amulti-methodapproachwasapplied
integrating both qualitative and quantitative methodologies. The
main objective of the qualitative approach was to explore the role of
cultural context in shaping employee psychological contract and resul-
tant employee outcomes in the non-Western South Asian context.
Management level employees from a number of South Asian private
companies participated in one-on-one in-depth interviews. A semi-
structured interview protocol was used to conduct the interviews.
Questions were asked to identify culturally relevant elements of HR
practices that have significant influence on employee psychological
contract and to reveal how employees perceive, feel and react to their
psychological contract fulfillment. The study identified several cultu-
rally congruent elements of HR practices with significant influence on
employee psychological contract. In addition, the study also assessed
theperceptionofpsychologicalcontractonemployees’jobsatisfaction,
commitment and motivation.
The main objective of the quantitative approach was to examine the
mediatingroleofpsychologicalcontractfulfillmentbetweentherelation-
shipofsalientHRpracticesandemployees’behavioralandcognitiveout-
comes. The data for the study were obtained from management-level
employees of the participating companies operating in South Asia. A
questionnaire survey was used to collect data from the participants. As
predicated, results found significant positive relationships between salient
HR practices of compensation policy, job security, selection and recruit-
ment, and decentralization and teamwork; and employee cognitive and
behavioral outcomes of job satisfaction, commitment, motivation and
organizational citizenship behavior when mediated by fulfillment of psy-
chologicalcontract.Theresultsalsorevealedtheexistenceofasignificant
relationship between employees’ cognitive and behavioral outcomes and
their individual performance. These findings were congruent with the
findings of the qualitativeanalysis.
Thisresearchmakestwomajorcontributionstothepsychologicalcon-
tract literature. Firstly, the research identified and investigated the cultu-
rally relevant elements of HR practices that significantly affect the
PREFACE ix
employeepsychologicalcontractintheSouthAsiancontext.Secondly,the
researchempiricallytestedandinvestigatedthemediatingroleofpsycho-
logical contract fulfillment between the relationship of salient HR prac-
ticesandemployeeoutcomes.Thisisamongthefirststudiestoinvestigate
employees’ perceptions, feelings and resultant outcomes of perceived
psychologicalcontractfulfillmentamongemployeesofSouthAsianorga-
nizations, therefore, extending the psychological contract literature by
applying the concept and construct of psychological contract fulfillment
in anon-Western context.
Schoolof Management ABM Abdullah
UniSABusiness School
University of South Australia
Adelaide,Australia
C
ONTENTS
1 Introduction 1
1.1 Background 1
1.2 Motivationofthe Study 3
1.3 Purposeofthe Study 5
1.4 SouthAsia: AnEmergingEconomic Region 5
1.5 Stateof HRIssues-Related Research in SouthAsia 8
1.6 Benefits ofStudying HRPractices in SouthAsia 9
1.7 PsychologicalContractResearch in aNon-Western
CulturalContext 10
1.8 Research Questionsand Objectivesof theStudy 12
1.9 Significance ofthe Research 13
1.10 Research Design and Methodology 14
1.11 Organization ofthe Book 15
1.12 Summary 17
References 17
2 CulturalContext 23
2.1 Introduction 23
2.2 BriefIntroduction to SouthAsia 24
2.3 TheConcept ofCulture 24
2.4 SouthAsianCulture 26
2.5 SouthAsianCulture in theLight ofHofstede’sStudy 27
2.5.1 Power Distance 27
2.5.2 Individualism 28
xi
xii CONTENTS
2.5.3 Masculinity 28
2.5.4 Uncertainty Avoidance 31
2.5.5 Long-TermOrientation 31
2.6 Impactof Religionon SouthAsian Culture 31
2.7 Impactof CulturalFactorsonHR Practices 34
2.8 CulturalContextand PsychologicalContract 35
2.9 Summary 37
References 37
3 TheMediating Roleof Psychological Contract 43
3.1 Introduction 43
3.2 SalientHR Practices 44
3.2.1 CompensationPolicy 45
3.2.2 Job Security 46
3.2.3 Trainingand Development 47
3.2.4 Selection andRecruitment 48
3.2.5 Decentralizationand Teamwork 49
3.2.6 InformationSharing 50
3.3 EmployeePsychologicalContract 52
3.4 HRPractices andPsychological Contracts 53
3.5 MediatingRole ofPsychologicalContract 55
3.6 Employee-EmployerRelationshipand Social
ExchangeTheory 56
3.7 PsychologicalContractFulfillmentorBreach 58
3.8 Impactof PsychologicalContractonEmployees Cognitive
andBehavioral Outcomes 60
3.8.1 Job SatisfactionandPsychological Contract 61
3.8.2 EmployeeCommitmentand PsychologicalContract 62
3.8.3 EmployeeMotivationand PsychologicalContract 64
3.8.4 Employees’ OCB andPsychological Contract 65
3.9 LinkBetween EmployeeOutcomesand Employee
Performance 68
3.10 Summary 70
References 71
4 Research Methodology 83
4.1 Introduction 83
4.2 Research Design:A Multi-Method Approach 85